Abstract:
This study assesses the impact of Microfinance on Rural communities in Agona
District in the Central Region of Ghana. The specific objectives of the study were
to assess customers’ level of awareness of microfinance programmes in place, the
effect of microfinance on poverty reduction, challenges faced by residents in
acquiring loans from MFIs, constraints associated with the operation of MFIs and
strategies to improve the services of MFIs. A survey was conducted and one
hundred (100) customers and twenty-five (25) employees of selected
microfinance institutions in Agona Districts in the Central Region of Ghana were
selected using purposive sampling technique to collect primary data via
questionnaires. The study revealed that the respondents did not understand the
condition attached to the loan application process of the selected microfinance
institutions. Again, the customers disagreed to microfinance programmes or
institutions causing an increase in their personal assets aside providing them
better and good standard of living thus, enhancing their quality of life. Once more,
the study revealed that, difficulty in hiring and keeping well-trained staff willing
to work in a rural community and high additional costs for ensuring security and
managing liquidity were the most challenging issues facing MFIs in reaching the
poor in rural areas. The study recommended the following to the management of
the selected microfinance institutions; decrease in interest rates, increasing
motivational incentives and encouraging formal and informal education
